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Yellowknife Mining has 70 milion shares that are currently trading for...

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Accounting

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Yellowknife Mining has 70 milion shares that are currently trading for $8 per share and $130 million worth of debt. The debt is risk free and has an interest rate of 8%, and the expected retum of Yellowknife stock is 10\%. Suppose a mining strike causes the price of Yellowknife stock to fall 23% to $6.16 per share. The value of the risk.free debt is unchanged. Assuming there are no taxes and the risk (unlovored beta) of Yellowknife's assets is unchanged, what happens to Yellowknife's equity cost of capital

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